Central Bank Consumer and Investor Protection Priorities

Director General for Financial Conduct, Derville Rowland, outlined the Central Bank of Ireland's (CBI) priorities for consumer and investor protection for 2021 at an online event on 16 March 2021. The priorities for consumer and investor protection for 2021 include a review of the Consumer Protection Code, a focus on the insurance industry and progressing enforcement cases. 

Strengthening consumer and investor protection is a strategic priority for the CBI.  The regulator seeks to achieve this by addressing systemic issues, conducting intrusive supervision and improving culture.

COVID-19

This year the CBI will continue to address the economic disruption caused by the pandemic and seek to support recovery. Strengthening resilience is a key focus and the CBI will be addressing risks related to the pandemic and other threats such as climate chance and cyber security.  

The CBI will also be focusing on the treatment of distressed debt by lenders, ensuring borrowers in arrears are supported by appropriately resourced and governed financial institutions. 

Consumer Protection

A consultation on updates to the Consumer Protection Code is planned for this year and firms with consumer-facing aspects will be keen to assess the proposals. The Consumer Protection Code has been a notable feature of many recent regulatory engagements and the general requirements of the CPC have been relied on by the CBI in recent enforcement actions.  They also currently form a pillar of the CBI's Business Interruption Insurance Supervisory Framework.

Insurance

Business interruption insurance has been an area of focus for the regulator from early on in the pandemic and that is set to continue. The expectation of the CBI is that claims are paid promptly and the regulator is challenging insurers on the management and processing of valid claims. Insurers are also the subject of a consumer insights survey of thousands of insurance consumers as well as a differential pricing review which is expected to conclude this year. It has been suggested that further regulatory action may flow from the conclusion of the differential pricing review.

Markets

Market conduct remains a priority and the CBI has published the Securities Markets Risk Outlook Report. This outlines the regulatory expectations of firms involved in securities markets in relation to the management and mitigation of identified conduct risks. The CBI is also conducting an ongoing review of compliance with the Market Abuse Regulation. 

Effective liquidity risk management is guiding supervisory engagements in the funds industry and the CBI continues its work on CP86 on the governance and management of fund management companies following a thematic review last year. Another review, with the European Securities Markets Authority, of costs and fees in UCITS funds is also planned.

Sustainability

The CBI expects that firms prioritise their sustainable finance obligations. Greenwashing (regarding the level of transparency provided as to a firm's environmental or sustainability impact) was identified as a significant consumer and investor protection concern for the CBI and the Sustainable Finance Disclosures and Taxonomy Regulations are intended to address this issue. 

AML/CFT

The Fifth Anti Money Laundering Directive (5AMLD) was recently signed in to law and commencement is awaited. The CBI will be focused on assessing the AML/CFT frameworks of Virtual Asset Service Providers, who are required to register under the terms of 5AMLD. The AML Guidelines for the Financial Sector are also expected to be updated this year in line with 5AMLD and the CBI expects firms to proactively assess their AML frameworks and to implement new requirements. 

Enforcement

Enforcement will continue to focus on firms with poor culture and poor consumer outcomes with a focus on misconduct and will include cases under the Fitness and Probity regime. The CBI continues to prioritise the development of the Individual Accountability Framework and the Senior Executive Accountability Regime. Separately, the Minister for Finance has indicated that draft legislation will be available before summer. 

Next steps

The CBI priorities cover a range of issues across the financial services sector and continue to focus on consumer and conduct issues, where more intrusive supervision or enforcement action may be expected.

To learn more about these regulatory priorities please register for the ALG Regulatory Series, a series of webinars covering the key issues facing regulated firms. Our first event covering the Regulatory Focus on Insurers is on 24 March at 11am; on 22 April we will look at practical steps to prepare for SEAR; on 3 June we will assess Market Conduct; and on 30 September we focus on the FinTech sector. Register your interest now.  

For more information please contact, Dario Dagostino, Kevin Allen, Patrick Brandt and Mark Devane, Partners and Sinéad Prunty, Knowledge Lawyer or any member of the Financial Regulation team. 

Date published: 24 March 2021